High on FAIR’s 2017 legislative agenda is reforming the Florida Hurricane Catastrophe Fund (Cat Fund). As you know, the Cat Fund was created to stabilize reinsurance rates from fluctuations due to adverse market conditions. Working with insurers, reinsurance brokers, policy makers, and the Cat Fund management, FAIR is promoting a bill that creates a flexible fund that can contract in good markets and expand if there are adverse changes that result in higher reinsurance costs.*
The proposal accomplishes the following:
Restructures the Cat Fund to include optional layers of coverage giving insurers more choice between the Fund and private market options.
Reduces coverage gaps between existing Fund coverage and the private market, eliminating the need to purchase duplicative reinsurance.
Allows ALL reinsurance costs to be included in rate filings.
Reduces the cash build-up factor for private companies but not for Citizens.
Mandates an annual appropriation of $10 million to fund a new anti-fraud initiative.
$8 million would go towards the staffing and operations of a new unit of investigators and prosecutors devoted exclusively to the prosecution of homeowner’s insurance fraud.
$2 million would go towards the Anti-Fraud Reward Program that would guarantee a minimum $1,000 award for information leading to an arrest